Watsonville's West Marine reports a slow second quarter

WATSONVILLE — A late start to the boating season and ongoing challenges in reaching core customers resulted in another disappointing quarter for national boating supplier West Marine, which lowered its financial forecast for the year.

The company reported Thursday that the company experienced "solid gains" in sales to professional customers and in its merchandise expansion categories, but core product sales suffered and promotional campaigns were disappointing. There were also challenges in online sales and a shift in product mix and customer type put pressure on margins.

"We were disappointed by second quarter sales, which were about flat to last year," said Matt Hyde, CEO and president. On a conference call with analysts and investors, Hyde noted there were gains in sales related to paddle sports, kayaking and women's clothing.

The retail industry is facing large changes, Hyde said. The company surveyed customers in the spring and said it was clear there is still a strong passion for a boating lifestyle in the American culture, "however, the way people recreate on the water continues to evolve," he said.

Boat sales have picked up nationally, however, the uptick has been largely attributed to an older demographic rather than the company's core customer base. Younger customers prefer smaller, simpler boats, according to the survey and respondents don't necessarily see West Marine as a leader in freshwater or lifestyle-related merchandise.

The company plans to reduce operating expenses and make "careful investments" strategic initiatives. While an ongoing effort to remodel stores and diversify product offerings seems to be helping sales, the company has postponed further "revitalization" efforts to reassess plans.

"We still have a long way to go for our stores to be top of mind for water lifestyle products," Hyde said. "During the second half of the year we'll be walking that delicate line of driving down expenses while continuing to make smart investments where we have a high likelihood of driving near-term profitability."

In other company business, West Marine announced recently the voluntary resignation of Ronald Japinga, executive vice president of Merchandising, Replenishment and Logistics. His last day was July 11.

West Marine Inc.

What: West Marine is a retailer and wholesaler of boating supplies with 281 company-operated stores located in 38 states, Puerto Rico and Canada and five franchised stores in Turkey.